RAJENDRA MOTIRAMJI SATONE,PUNE vs. ITO WARD-2, CHANDRAPUR

PER KHETTRA MOHAN ROY, AM: This appeal filed by assessee is directed against the order of National Faceless Appeal Centre, Delhi (for short, “CIT(A)”) passed u/s. 250 of the Income Tax Act, 1961 (for short, “Act”) dated 30.05.2025 arising out of penalty order passed u/s.

ITA No.417/Nag/2025 (Rajendra Motiramji Satone) 271(1)(b) of the Act dated 03.05.2024 for Assessment Year (A.Y) 2015–16. 2. The effective ground raised by the assessee in the present appeal is that the Ld. CIT(A) erred in confirming the penalty levied, despite the assessment having been completed under section 147 read with section 144 of the Act, and that the penalty imposed under section 271(1)(b) is invalid, particularly when the tax effect is below Rs. 50 lakhs. 3. Brief facts of the case are that the assessee, an individual, did not file the return of income originally. Based on information available with the Department that the assessee had purchased a property for a consideration of Rs. 30 lakhs whereas the value of the transaction was Rs. 70 lakhs, proceedings under section 148A were initiated. Consequently, notice under section 148 was issued and served upon the assessee. In response thereto, the assessee filed the return of income declaring total income of Rs. 1,87,000/-. Thereafter, statutory notices under sections 143(2) and 142(1) were issued calling upon the assessee to furnish relevant details and supporting documents. In compliance, the

ITA No.417/Nag/2025 (Rajendra Motiramji Satone) assessee disclosed the capital gains arising from sale of the plot and claimed deduction under section 54 on account of purchase of a residential house. The assessee also furnished copies of the sale deed, computation of income, return of income, loan statement, and bank account statement. Upon perusal of the material placed on record, the Ld. AO observed that the stamp duty value of the property was Rs. 44,41,900/- as against the declared sale consideration of Rs. 35,00,000/-. Accordingly, the differential amount of Rs. 9,41,900/- was treated as income from other sources. Simultaneously, penalty proceedings under section 271(1)(b) of the Act were initiated. Since there was no further compliance from the side of the assessee, the Ld. AO levied penalty under section 271(1)(b) amounting to Rs. 70,000/- 4. Aggrieved by the levy of penalty, the assessee preferred an appeal before the Ld. CIT(A). However, due to non-compliance on the part of the assessee, the Ld. CIT(A) dismissed the appeal and confirmed the penalty levied by the Ld. AO. Being further aggrieved, the assessee is now in appeal before this Tribunal.

ITA No.417/Nag/2025 (Rajendra Motiramji Satone) 5. We find that penalty of Rs. 70,000/- has been imposed on the assessee u/s 271(1)(b) of the Act at the rate of Rs. 10,000/- for non-compliances on 07 occasions. However, the assessment order was not passed u/s 144 of the Act and is a speaking order. In the assessment proceedings, assessee has submitted all necessary documents and evidences to prove his case, therefore the question of imposition of penalty will not arise. In fact, the only addition in this case was Rs. 9,41,900/- as evident in para 3.4 of the assessment order towards the difference between purchase consideration and sale value of property. Learned counsel for the assessee submitted that assessee has supplied all information and evidences though albeit late the AO has passed the order u/s 147 r.w.s 144B of the Act and it is not a case of best judgment assessment. No prejudice has been caused to the department. In this regard, Ld. AR relied upon the decision passed by the coordinate Bench of Delhi Tribunal in the case of Akhil Bhartiya Prathmik Shmshak Sangh Bhawan Trust Vs. ACIT, [2008] 115 TTJ 419 (Delhi), wherein it was held that assessee had not complied with notice u/s 142(1) of the Act but

ITA No.417/Nag/2025 (Rajendra Motiramji Satone) assessment order was passed u/s 143(3) and not u/s 144, that meant that subsequent compliance in assessment proceedings was considered as good compliance and defaults committed earlier were ignored by AO and, therefore levy of penalty u/s 271(1)(b) was not justified, which has been followed by ITAT, Delhi in the case of DLF Commercial Enterprises vs. ACIT in ITAT No. 2530/DEL/2018, dated 18.02.2021, wherein the Tribunal under similar set of facts has held as under:- C) The present appeal before us has been filed by the assessee against the aforesaid impugned appellate order dated 01.03.2018 of the Ld. CIT(A). At the time of hearing, the Ld. Authorised Representative of the assessee submitted that the assessment order dated 03.12.2016 which was passed by the Assessing Officer was a regular assessment order u/s 143(3) of Income Tax Act, and not a best judgment assessment u/s 144 of Income Tax Act. He contended that this (the fact that best judgment assessment u/s 144 of IT Act was not passed) implies that the subsequent compliance made by the assessee in the assessment proceedings [after levy of penalty u/s 271(1)(b) of Income Tax Act] was considered as good compliance by the Assessing Officer and that the defaults earlier committed should be treated as having been ignored by the Assessing Officer. For this contention he relied on orders of Co-ordinate Bench of ITAT Delhi in the cases of Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust vs. ACIT 5 DTR 429 (Delhi Tribunal), Globus Infocom Limited vs. DCIT (order dated 29.06.2016 in ITA No. 738/Del./2014 for AY 2010-11), Carreen Builders & Developers vs. DCIT (order dated 20.09.2017 in ITA No. 5737/Del/2015 for for AY 2012-13). In these orders, it was held by Co-ordinate Benches of ITAT, Delhi that when the order is finally passed u/s 143(3) of IT Act and not u/s 144 of IT Act; it would mean that subsequent compliance in the assessment proceedings was 5

ITA No.417/Nag/2025 (Rajendra Motiramji Satone) considered as good compliance and the defaults committed earlier were ignored by the Assessing Officer. For the ease of reference, relevant portion from order in the case of Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust vs. ACIT (supra) is reproduced as under :- "2.4 Coming to the issue of recording of satisfaction, it may be mentioned that mere initiation of penalty does not amount to satisfaction as held by Hon'ble Delhi High Court in the case of CIT vs. Ram Commercial Enterprises Ltd. (2001) 167 CTR (Del) 321 : (2000) 246 ITR 568 (Del). In absence of recording of the satisfaction in the assessment order, mere initiation of penalty will not confer jurisdiction on the AO to levy the penalty. 2.5 We also find that finally the order was passed under s. 143(3) and not under s. 144 of the Act. This means that subsequent compliance in the assessment proceedings was considered as good compliance and the defaults committed earlier were ignored by the AO. Therefore, in such circumstances, there could have been no reason to come to the conclusion that the default was wilful." (C.1) Similar view was taken by Co-ordinate Benches of ITAT Delhi in the aforesaid cases of Globus Infocom Limited (supra) and Carreen Builders & Developers Pvt. Ltd.(supra). (C.2) The Learned Departmental Representative relied on the orders of the Assessing Officer and the ld. CIT(A). (D) We find on perusal of the assessment order that in paragraph 2 of the assessment order, that the Assessing Officer has expressed satisfaction with the compliances made by the assessee. To quote from the assessment order, the observation of the Assessing Officer is: “In compliance to the notices, Sh. Gaurav Jindal, CA & authorized representative of the assessee attended for and on behalf of the assessee from time to time and furnished written submissions and details called for. These were examined and the case was discussed with the authorized representative.” It can be readily inferred from this observation of the Assessing Officer that the Assessing Officer was, on the whole, satisfied with the overall compliances made by the assessee during the

ITA No.417/Nag/2025 (Rajendra Motiramji Satone) assessment proceedings. The satisfaction of the Assessing Officer with the compliances made by the assessee is also evidenced by the fact that no addition was made by the Assessing Officer, and the returned income was accepted in the order passed u/s 143(3) IT Act. We are of the view that penalty levied by the Assessing Officer u/s 271(1)(b) of the IT Act deserves to be cancelled if there are materials to suggest on conclusion of the proceedings before the Assessing Officer; that the Assessing Officer was, on the whole, satisfied with the overall compliances made by the assessee during proceedings before the Assessing Officer. (E) In view of foregoing, and in the facts and circumstances of the present appeal before us, we hereby cancel the penalty amounting to Rs. 10,000/- levied by the Assessing Officer u/s 271(1)(b) of Income Tax Act.” 6. Respectfully following the doctrine of binding precedents and maintaining judicial consistency, particularly when identical penalty on similar facts have been deleted by the Coordinate Benches throughout the country, we direct the Assessing Officer to delete the penalty of Rs. 70,000/- in entirety. Accordingly, the grounds raised by the assessee are allowed. 7. In the result, appeal filed by the assessee stands allowed.

Order pronounced on 18/05/2026 under Rule 34 of Income Tax (Appellate Tribunal) Rules–1963.

Sd/- sd/- PAWAN SINGH KHETTRA MOHAN ROY JUDICIAL MEMBER ACCOUNTANT MEMBER Nagpur: Dated: 18/05/2026 KRK/vr 7

ITA No.417/Nag/2025 (Rajendra Motiramji Satone)

Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Nagpur; and (5) Guard file. By order Vukkem Digitally signed by Vukkem Rambabu Rambabu Date: 2026.05.18 17:31:24 +05'30' Senior Private Secretary ITAT, Nagpur